Jestina Clayton came to America as a refugee from war-torn Sierra Leone and strived to provide for her family by creating and operating her own hair braiding business. She believed that the skills she had honed from a young age could provide a great service to those in her new country and provide a means for achieving her own American dream. However, after a few years of business, she received an anonymous threat to report her to the Utah Cosmetology Board for operating without a license. This would ultimately lead to the shutdown of her business unless Jestina miraculously procured a cosmetology license — a request that seems completely reasonable until one learns that in the state of Utah, and in many other states, acquiring a cosmetology license requires paying thousands of dollars and completing 2,000 hours of training. Jestina, an immigrant using her skills to support her family, had neither the money to afford these classes nor the time to devote to them. She was effectively prevented from providing for her family because she didn’t have the means to afford training for a skill she already possessed.
Overnight, Jestina became one of countless Americans who are prevented from entering the workforce by unreasonable and impractical occupational licensing requirements. At first glance, occupational licensing seems like a necessary and practical form of government oversight, one that ensures people in certain fields have the skills necessary to perform their jobs safely. However, this common sense policy has grossly expanded past its intended uses and has ironically created adverse effects in the markets and industries that it seeks to protect.
Occupational licenses are commonplace across the many industries that make up our economy. In theory, they exist so that the government can oversee and regulate the professions and businesses that deal with the public’s well-being, health, and safety; occupations ranging from registered nurses to lawyers are required to be licensed by the state or municipal government. Receiving a license in a specific field usually necessitates the payment of a fee and the completion of a competency training course. These regulations seem sensible at first; in order to protect its citizens, for example, a government should require that practicing surgeons prove their competency and ability to correctly perform a surgery. But as the power of occupational licensing boards has expanded, the requirements they impose have gone beyond the realm of practical purpose.
An alarming number of licenses and prerequisites are increasingly being required for jobs that simply don’t need them, which has a substantial effect on low-income citizens. The hundreds or thousands of hours required by some of the licensing processes put otherwise very accessible and practical professions, such as haircutting or cosmetology, out of reach for those most in need of work. This demographic has neither the financial resources to pay for training classes, even if it is only a few hundred dollars, nor the time to take out of a workday to be in class.
In addition to being expensive and burdensome, the requirements imposed by licensing boards are often inconsistent and without justification. A 2012 study conducted by The Institute for Justice found no consistency between the public health or safety risk posed by a profession and the difficulty of getting a license to enter that field.“For example, 66 occupations have greater average licensure burdens than emergency medical technicians. The average cosmetologist spends 372 days in training; the average EMT only 33.” These statistics are frightening, as they not only demonstrate the inconsistencies of occupational licensing by state, but also the over-licensing of professions. Perhaps most concerning, however, are some of the professions that are licensed. Alongside child care worker and contractor, one can also find florist and interior designer. It is a waste of time to require occupational licenses for these types of careers as they pose little to no risk to the general public’s safety and well-being. These industries don’t need the government regulating them, because they’re self-regulatory on their own. If someone is a talented interior designer with no formal training or licensing, they most likely will operate a successful business. Likewise, if one is bad at interior design, it won’t matter whether he or she is certified by the state; a bad interior designer will eventually stop getting new business. Licenses in this industry and many others are a non-factor as they are self-regulating.
A study conducted by the White House in 2015 found that today’s work force is 25 percent occupationally licensed at the state level, compared to under 5 percent back in the 1950’s. When occupational licensing was first implemented in the middle of the 20th century, the power and responsibility quickly shifted to the states and away from the federal government. Over the next half-century, states established independent boards and commissions, usually comprised of members of the professional field in question, to facilitate and oversee the licensing process and requirements. The White House Report found that these boards are primarily funded through the fees they collect from those paying for the licenses.
These self-governed boards profit directly from the fees they collect, and as a result are strongly motivated to continually raise the fees and expand licensing requirements in order to generate higher revenue for themselves. Additionally, these boards are often made up of professionals who work in the very field they are given the power to regulate. This clearly creates an incentive for members to increase the difficulty of obtaining a license and thus joining said professional field, thereby reducing competition for themselves and allowing already-licensed professionals to price gouge.
An important note is that this isn’t an issue that has arisen due to Republican or Democratic policies. There is no political or ideological pattern among the states that suffer most heavily from the burden of licensing. A report released by Jason Furman, Chairman of the Council of Economic Advisors, found that the states that require the most education and experience to be licensed (based on total industry averages) are California, Arizona, and Hawaii. Additionally, The Institute for Justice study found that these same three states as well as Oregon, Nevada, and Arkansas made up the top 6 most heavily regulated states for occupational licensing. These states span the political spectrum and further peg this as a nonpartisan issue, but nonetheless one of bipartisan concern.
But what is the solution? It likely lies in the unintentional catalyst of this problem: the states. A few states, realizing the unintended consequences of these policies, have already taken initiative and begun working to correct the issue through public policy. Earlier this year in the 2016 legislative session, Arizona introduced and passed HB 2613, which removed several unnecessary licenses while reducing the requirements for obtaining others. This bill strived to put “common sense” back into occupational licensing in an effort to make careers more accessible to all. Yoga instructors, assayers, and fruit packers were among the occupations for which licensing restrictions were reduced or eliminated, and recently Iowa even joined Utah (and a few other states) by deregulating hair braiding in an effort to lessen the burden on those seeking to enter the industry.
However, these reforms by specific states are not without stiff resistance. The original drafts of the Arizona delicensing bill show many more occupations that the Governor’s Office and State Legislature had hoped to deregulate, but the boards overseeing their licensing fought back hard to protect them. Often times these boards hire powerful lobbyists, with the one they have collected off of licensing fees, in order to lobby on behalf of continued and stricter licensing practices. Despite it being a noble cause that would help those most in need, politicians are deterred by these lobbying powers.
Occupational licenses were created to protect the health and safety of consumers, but unfortunately, licensing policies have been misused and prevent people from earning an honest living while simultaneously stifling competition and the infusion of new ideas into the marketplace. More states must follow the example of the few that have begun deregulating this unnecessary licensing, and the existing bipartisan support must continue if there are to be meaningful results. This issue is in the beginning stages of being fleshed out, and debate is sure to follow on which professions need to be regulated. Nevertheless, it is coming as people work towards making more opportunities free and open to a wider base of the public.
Every person deserves the right to pursue their own American dream, and policy change in regards to occupational licensing is a must in order to provide that right. Justina Clayton was lucky; she won her right to work without a license in court and was able to pursue her dream. But until this policy begins to be advocated for and implemented on a mass scale, workers trying to support themselves and their family will be barred from doing so. It is time for meaningful reform because what was created as a common sense policy has expanded into regulations that don’t make much sense at all.